Entry & Exit #1 How to Build, Scale & Sell a Security/Fire Business

Welcome to Entry & Exit — the new Owned and Operated series for builders in the security & life-safety world. Hosts Stephen Olmon and Collin Trimble share how they grew Alarm Masters from under $2M to ~3× revenue, including +50% RMR growth in Year 1.

From recurring revenue (RMR) to acquisitions and organic growth, this episode breaks down what it really takes to scale a security business — and eventually position it for a successful exit.

✨ What You’ll Learn
-The 3 revenue pillars (Install, Service, RMR) and target margins
- Why buying monitoring accounts opens doors to 5 scopes (cameras, access, fire, intercom, PA)
- The coffee/taco drop strategy that keeps customers sticky & cross-sold
- How Alarm Masters went from 1st deal → 4 acquisitions → $6M+ in just 2 years
- Lessons on hiring, ops leadership, and competing with the national giants
- What buyers look for when evaluating your business (RMR %, retention, service cadence)

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Stephen Olmon

Collin Trimble

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Transcript

E&E EP 1 Transcript

Stephen Olmon: [00:00:00] We want to talk about how to grow, how to get into the market, and then also what does it look like when you want to exit that market. Okay. I like this. 

Colin Tremble : We were under 2 million top line when we bought it. We've basically three X that 

Stephen Olmon: and in this industry, customers are buying some type of security technology every 1.5 years, and there's five scopes of work generally that they have.

It's kind of crazy. 

Colin Tremble : We grew RMR by 50% in year one organically, which when we tell other people that, like, what did you do?

John Wilson: Welcome back to Owned and Operated. I'm your host, John Wilson. During the day, I run a $30 million home service company in Ohio. And for fun, I run a podcast teaching other people how to build a $30 million home service company. Today I'm joined on the show by my good friend Steven Ulman and Colin Trimble.

Welcome to the show guys. 

Colin Tremble : Thanks Sean. Thanks for having us. 

Stephen Olmon: Thanks for having us. 

John Wilson: This is, uh, this is gonna be a lot of fun. You guys are helping us. [00:01:00] Uh, we're launching a new segment called Entry and Exit, and it's about security and alarm industry, which you guys have been buying with your core business alarm masters.

And today we're gonna be walking through that journey. We're gonna be talking a little bit about like, what that industry's like, and, uh, we're gonna be talking about. Sort of the content that we're gonna be creating. So, uh, for, for those of you that are just starting to listen, uh, Steven and I did an episode, I think it was three and a half years ago.

Colin Tremble : It was, 

John Wilson: it, it was, so I remember exactly what it was because I was, um, I was, we were in Florida for a month in February of 2022, and I recorded your episode on the dining room table February of 2022. Um. So, yeah, three and a half years ago. So yeah. Pretty, pretty funny to be here. So in that time, the, the, the goal then was 50 by 50.

So we're gonna have 50 businesses by 2050. 

Colin Tremble : That's right. 

John Wilson: Which I think we've turned that into. Let's push [00:02:00] alarms really hard. 

Colin Tremble : Yeah. Let, let's be responsible and make good business decisions. 

John Wilson: Yeah. Yeah. Pretty much. 

Colin Tremble : Yeah. 

John Wilson: Well, I'd love to hear sort of the origin story of Alarm Masters, how you guys met, um, and like, and what we're doing here with Alarm Masters.

Colin Tremble : Yeah, absolutely. So Colin and I went to Texas a and m University. For those of you. Yeah, that's right. Uh, it's crazy Aggies. And so we've known each other for 15 years and we stayed in touch. We both kind of ended up in, um, technology, software, sales type roles and stayed in touch. And then, um, over the course of time, I became pretty interested in buying businesses and Colin sat me down one day and said, let me tell you why the future of your life should be security and alarm.

And I was like, Hmm, not so sure, but okay. 

Stephen Olmon: I think I said, give me 30 minutes. Just give me 30 minutes and we'll get you there. And I, I think 

John Wilson: I even remember [00:03:00] talking to you about that, Steven, a few years ago. And I was like, I was like, really? 

Colin Tremble : So arms, it was, we joked about that episode for owned and operated, right around that time is when we tried to buy.

The business that we ended up acquiring for the first time. And so Colin can can speak to that some, but right around that time is when we kind of, uh, took a step towards the industry and Colin, as you'll find out, is ice to an Eskimo sort of sales guy. And, uh, he, he convinced me. So 

Stephen Olmon: yeah, it didn't take too long.

We, uh, we have kind of a wild story. There's a lot of, uh, searcher stories you'll hear out there where people spend two years in 200 meetings and Lois trying to find that one. Perfect deal or the deal they can get under LOI. We didn't have that path. Uh, I didn't know what a searcher was. I didn't know what entrepreneurship through acquisition or ETA was, wasn't aware of that.

I just knew this industry is great. There's a massive retirement wave of, uh, folks [00:04:00] that are moving outta the industry and wanna exit. There's a tremendous amount of consolidation, a lot of recurring and reoccurring revenue and a lot of stuff about it that sort of excited me. So when we first kind of, I got him on that whiteboard and got him convinced or got him close.

Mm-hmm. We started looking at some businesses and we, we actually, uh, the first thing we did is we reached out to a broker who's the only broker that I knew that worked at the security company, the manufacturer I worked for, and I said, Hey, Kelly, like would love to, uh, connect with you. We're looking at buying a business.

Here's the profile. You know, we would look, you know, mostly commercial. She sent back a laughing emoji and said, Hey, uh, I've got a guy you gotta talk to. You gotta talk to this guy. He was actually one of your dealers when you were at Revo, the company that I was at for the manufacturing company. So I get connected and I'm like, Brian, what the heck is going on, man?

Like, we catch up for the first time in seven years. Um, and he was great. We had a great relationship before, so we went instantaneously [00:05:00] from. There was not a whole lot of warm introduction that had to happen. It was just catch up and let's talk about your exit plan and what we're kind of looking for. And the stars really aligned because immediately within two weeks we were under LOI, and I think four months later we closed on the deal.

Uh, it was a perfect size for us at the time and what we were looking for. Um, and it had the right mix of some of the commercial and residential stuff that we were looking for. The right services had a fire alarm license, which was really important to us to be able to do fire alarm. Yeah. Um, and we spent, yeah, we spent about four months in due diligence.

Yeah. 

Colin Tremble : So in instead of 10, 20, 50 different, you know, potential opportunities, we literally bought the very first one we ever looked at. 

John Wilson: What, what am I supposed to say here? Isn't it like, Hmm. Yeah, I like that. Yeah, 

Colin Tremble : that's right. Wow. I'm really into that. 

John Wilson: I'm really into that. I, but you see, the problem is I am really into that.

Yeah. I think that sounds [00:06:00] great. Can, can you explain, uh, just like the business model of security and alarm, like, I feel like I understand a part of it. 

Stephen Olmon: Yeah, I'd love to do that. There's, I think the, the first place to start is the three types of revenue that exist. In the security and life safety industry really.

Mm-hmm. Uh, and the three types of revenue to just kind of classify them at a 30,000 foot view would be, uh, installation revenue. So that'd be bigger projects. That would be, I go out to see a customer and they say, Hey, I need a hundred cameras. Can you give me a proposal for a hundred cameras? Um, so that would be net new projects sometimes from the ground up, sometimes retrofit.

The second type of revenue, um, is service revenue. So I've got an existing burglar or fire alarm system or camera or access control, and they've got something wrong with it. It doesn't need to be replaced, it just needs a service call. So there's service revenue for your existing clients. And then the third type would be monitoring or reoccurring revenue or recurring revenue.

So that's the things that you would get [00:07:00] from monitoring their fire or Berg system, or there's cloud subscriptions that we sell to our customers. That are also classified in that. So you really get this mix of recurring revenue through monitoring and really through the service too. We would call that reoccurring revenue that has inspections and service calls.

And then you get the kind of one time larger projects that are in the installation side. 

John Wilson: And how much of the businesses like commercial, like in, in my type of warehouse office versus somebody's house. 

Stephen Olmon: Yeah, great question. So for our particular business, we're about 80% commercial. We have 20%. That's on the residential side.

We love our residential customers. We don't actively market to residential. A lot of that has come through acquisition, friends and family and owners of businesses that we then take on. There's a whole industry that is dedicated just to residential alarms and, and that's a slightly different but similar model.[00:08:00] 

Um, but we participate mostly in the commercial side, and then obviously take care of our residential customers, uh, just as much along the way. 

John Wilson: And how many acquisitions have you guys done in this space so far? 

Stephen Olmon: Yeah, so we've done 

John Wilson: four. So what, what was it when, what was the size when you first bought it?

What's, what's the size today? 

Colin Tremble : Yeah, the, uh, we were under 2 million top line when we bought it. Mm-hmm. We would've liked to been a little bit larger. Um. But also we had a geographic constraint, right? You buy a business, you have different factors. Collins in Houston, he knew the industry. He wanted to kind of act as day-to-day ops.

I focus a lot more on marketing and m and a, and so we had that constraint, and so it was a little smaller than we desired, but it still was a good fit. Based on what he said earlier. So that's kind of where we were. And it's been about two and a half years. And, um, we've basically three x that through organic and inorganic activity.

Um, and we're kind of, you know, marching towards, you [00:09:00] know, uh, 10 million. 

John Wilson: So we're, we're like about to hit six sounds, sounds like. 

Colin Tremble : Yeah. Yeah. That's kinda where we're at. 

John Wilson: How much of that is, or how much of is organic versus inorganic, like, was. You know, the extra 4 million was three of it bought and one of it earned, or you know, like, how did you guys get there?

Colin Tremble : Pretty half and half. Like it's been a, it's been a mix. And that's from day one. Yeah. We like, so in this industry. People call recurring revenue, RMR, whereas like all of our software friends, think of it as MRR, right? You look at this pretty striped dashboard and it's MRR, um, in this industry, you will look like an idiot.

If you talk to an owner about his business and ask what his MRR is, uh, they would, they would laugh at you. So, uh, the, we grew RMR by 50% in year one, organically. Okay. Um, which, when we tell other people that, like, what did you do? It's like, well. Colin's just really attractive, you know, he really just, that was the first thing I thought when I got on this call, you [00:10:00] know, that's, it.

Brought, brought some people, tacos and donuts and smiled. That's it. So, no. Um, he's also, you know, relatively smart. So we, uh, we had a lot of success in year one, right out the gate on the organic side. And I know Colin's especially passionate about, uh, sales and sales orgs and, um, sales strategy. I'm as well, but.

We really saw a huge opportunity to cross sell the existing customer base. And so that drove and ha continues to drive a ton of our organic growth is just mining our current customer base of thousands of customers. 

Stephen Olmon: And what's unique too here is the, the inorganic and organic paired together in a unique way that's kind of different than any other industry.

So when you go acquire another business, you're gonna typically purchase that business on a multiple of their monitoring. RMR. That monitoring is usually just a burglar alarm, but burglar alarm is one of five scopes that we can sell a commercial customer, [00:11:00] so that's great. I'm gonna get their burglar alarm monitoring, gonna get some service work out of them.

But what that does is that unlocks a new customer that whenever they need cameras or access control or intercom or fire alarm or PA system, we're gonna be their first call. So what happens is, is you get to buy this customer at a multiple other MR, and then you get some service revenue out of it. Great.

But you get future potential LTV from the customer on those projects because you are gonna be their first call. And in this industry, customers are buying some type of security technology every 1.5 years. And there's five scopes of work generally that they have. So there's gonna be a lot of purchasing.

Almost every year they're gonna be purchasing some type of security technology along the way. 

John Wilson: I feel like that tracks I'm, I'm just thinking about our own business and. You know, we bought access controls, then we bought like, uh, cameras to put basically everywhere. And then we took over a new building. We bought access controls, we brought cameras.[00:12:00] 

Yeah. Uh, so yeah, I, I can see how it stacks up. Um, and then there's been like little piddly like, yeah, hey, that door needs access control. There's no way to get it, and how do we do it? And yeah, I, I can understand how that happens. Yeah. Yeah. That's, that's interesting. When you're, um, on, on six, uh, million, is that one location, is that multiple locations?

Colin Tremble : Yeah, everything is in the greater Houston, Texas area right now, and our long-term goal is Texas and surrounding states. Um, so we've actively looking at opportunities in other markets, whether it's in Texas or outside of Texas, but we do have a regional focus. Um, you know, we've, we've considered other opportunities in the past, but we're really convicted at this point.

That the best thing for us, the best thing to achieve our goals is to really try to hone in on a region. Um, you've done that yourself really successfully. And so, you know, we, um, we just. [00:13:00] Want to try to grow, grow aggressively, but do it smart. And I think it would be playing on hard mode a little bit to go buy a deal in Boise or Omaha or Minnesota.

So 

John Wilson: how, how big, how big are you thinking a region is? Like, is a region like Houston or is a region Texas like Southwest? No, 

Colin Tremble : we, we really intend to be in all four major markets in Texas. Um, so that's DFW, Austin, San Antonio, Houston. Um, that's our, that's our goal. And then really open to kind of the.

Oklahoma, Arkansas, Louisiana, those sorts of things. 

John Wilson: What's the, like, economic profile of a branch? Like are, are, or, or maybe the industry as a whole just to, I'm, I'm trying to understand the margins of this industry. So if, if I was a typical, I'm sure there's giant players, like is a normal branch like two to 5 million bucks or is it $20 million?

And then margin. 

Stephen Olmon: Yeah, the branch offices and the, and I would say the central office, it kind of depends a little bit about your acquisition [00:14:00] strategy. So if you're opening branch offices through like greenfield expansion, where you're gonna go into Dallas and open up a brand new branch, you're probably in that two to $5 million range.

That is not, that's not our, uh, desire and goal. Our goal is to buy platform businesses that are already doing two to $5 million and expand those to six, seven, $10 million of top line revenue. Um, across all those. So they're gonna be effectively platforms in every city. We don't, we don't really have a desire, at least today, in the strategy to just kind of open a brand new branch that's an extension of alarm masters that's not really in the plan.

Um, and then the other thing too, just to remember is you can buy additional businesses in those markets and just buy their accounts and then tuck those into your existing branch as well. So there's continued, uh, inorganic growth that can happen. And then to answer your question on the margin, so it depends a little bit, but like, you know, we would be shooting for somewhere, most companies are shooting for somewhere between 15 and 20% net income margins is, is typically what people are [00:15:00] looking for, uh, on a branch between two and 7 million.

Yeah. 

Colin Tremble : It also depends if you're managing it for growth or earnings, right? Like it depends what mode you're in. I think you can achieve. 25 to 35% margins, but you have to manage it pretty specifically. Yeah. To that end. Whereas we're managing for pretty aggressive growth. 

John Wilson: When you're thinking about, you know, you gave some big ranges of like platform size locations.

When you're thinking about, hey, that's a big, you hear about somebody's, you know, you're an m and a, you're talking to people, is is 10 million, like market leader is 30 million market leader, like what's the big dog in 

Stephen Olmon: each city 

John Wilson: doing? 

Stephen Olmon: Yeah, the big dog in each city is doing 20 to 30 million of top line revenue.

'cause those are the regional players. So you, you really have three tiers of players in this market. Uh, the first one would be national accounts, so that would be the ones you're all familiar with. That's a DT, that's, you know, Johnson control. Um, then you've got regional players and these are folks that usually [00:16:00] are across all the major metros or multiple states, and then you have independent operators.

And so you get kind of a mix the, the profile of an independent operator. It's, it's really as low as, you know, $1 million up to kind of 5, 7, 10, maybe even 10 million if they're a larger independent. And then those regional operators are 20, 30, 40 million, um, of top line revenue. 

John Wilson: Yeah, that sounds big. And when, in a 20 to 30 million, how much of you know the three pillars of, uh, revenue?

Like how much of that's recurring? How much of that is big construction projects? Like what's the mix? 

Stephen Olmon: That's a really great question and it's a distinction in this industry that's not really understood outside of the industry and even, even in the industry, there's still just a lot of like confusion around this.

So there's traditional, what people would call security or alarm businesses, and then there's the folks that they call integrators. They sell the same products and a lot of times they sell the [00:17:00] same services, but their go to market is entirely different. So the integrators are the ground up construction guys.

They only work with one or two or three of the largest general contractors or developers, and they're out there building everything from ground up. Mm-hmm. So their revenue is almost 90 to 95% is one time projects. Through a large, you know, commercial general contractor. 

John Wilson: And is that gonna be the big dogs?

Is that the 20 to thirties? Is that like a ton of that or Totally different thing? 

Stephen Olmon: Yeah. Yeah. Generally, so, generally the 20 to thirties are, but a lot of the most successful ones are blending it. So they're also doing both the ground up construction, but they're also doing a lot of the like, smaller middle market stuff.

Mm-hmm. That also has a tremendous amount of, we would call that design build. So we're walking in, we're retrofitting, we're getting to design customers going direct with us. There's no middleman or general contractor, and that's what ALARM Masters is mostly focused on purchasing. There's all, we do a little bit of ground up today, just naturally through our customers.

Uh, but we're not pursuing relationships pretty heavily in [00:18:00] the general contractor world. 

Colin Tremble : When you're going direct end user, typically it's more profitable. 

Stephen Olmon: Yeah. 

Colin Tremble : Um, uh, a tighter relationship, better LTV, um, less, uh, you know, change orders, less problems of the, you know, of wrapping up a project like just generally speaking.

When you go direct, you just have a lot more control. And we like that. 

Stephen Olmon: It, uh, it's not just more profitable from a gross profit perspective. It's also more profitable from a net income margin perspective. Because what happens is a lot of these guys that are going, uh, direct through, or sorry, are going through a general contractor, they're doing what's a lot of bid work.

So instead of winning one out of. 10 projects, they're winning one or two out of a hundred projects. So they have a lot of manpower and effort and overhead dedicated to estimating those other 98 projects that they did not win. And that's a lot, that's a lot of volume. And then you get that one and that one is several million dollars.

And that's kind of how they ride the wave a little 

John Wilson: bit. I did, uh, an episode that still sticks with me, and this is probably like a first. 20 to [00:19:00] 30 episodes and I had a guy on named, uh, FCON use. Hmm, yep. And he Flooring. 

Colin Tremble : Flooring, right? 

John Wilson: Flooring, yeah, yeah, yeah. Like commercial flooring. And I don't remember what, what episode number it was, uh, but it was like, I, I think like first, you know, a couple dozen, um, and I still remember it five years later because they would bid like.

I, I don't even know. It was like hundreds of projects a week. 

Stephen Olmon: Yes. 

John Wilson: In, in the hope of getting, uh, yeah. One or two. And he had this whole machine built, like he went and hired, like, estimating teams in Ukraine to just churn out estimates. Sure. It was, it was fascinating. If you guys are, you're engaging in m and a and a, a $5 million, like, uh, location pops up as like, Hey, you know, I wanna sell.

What's the split of revenue that you guys are like, hell yeah, we, we we're gonna go take this thing down. Is it mostly recurring? Is it like, what, what's that [00:20:00] split that you get? These guys are best in class. 

Stephen Olmon: Yeah, we generally like things to be north of 25% of their total revenue is gonna be recurring.

Ideally, closer to 50% is like kind of where we would love everybody to be in m and a. Um, and, and that would also include like if the reoccurring, so we're gonna look very heavily at their service plus their RMR or their monitoring revenue, right? 'cause we wanna understand how much revenue are they deriving.

From their existing base. How used to your, how customer or how are your customers used to buying from you? That's a natural pattern for them. Versus you do a contract, you do a big project, you install it, you're gone, you're out of there. And they don't, they don't know who you are. You just installed their stuff.

They don't even know you. 

John Wilson: So that's, it's recurring, which is like the monitoring monthly subscription. Correct. Reoccurring, which is the service work I need to repair on my whatever and projects. Like I'm building something, we're doing a remodel. That's right. And those are the three's, right? Splits? Yeah.

For, for [00:21:00] each of those, I'm assuming the recurring, like the monthly RMR is like full freight margin. Yeah. Like are like 99%, is it, you know, anything besides that? Is there some cost associated. 

Stephen Olmon: Yeah. So it depends on, it depends on what your, so there's we, so we get in a bad habit in the industry of saying everything that's RMR is monitoring revenue, and that is a big chunk of it.

But actually a lot of it too is cloud subscriptions. And so it's kind of a unique thing. Oh, so if I'm selling you a camera system. Instead of doing a server locally, you can put all those cameras in the cloud and there's a charge for that. Let's just say it costs me 10 bucks a camera. I can pass that on to you for 15 bucks a camera.

That would be a pretty standard type. And that's like to, 

John Wilson: is that to access it remote or is that to store the video footage or both? 

Stephen Olmon: Both. Both. Yeah. Both. Okay. And there's blends of all type, right? So there's other folks that will allow you to store it locally, but then the bit, the software is in the cloud, and so there's a lower subscription, so there's all types of blends of that.

So those are gonna [00:22:00] have, those cloud software subscriptions are gonna have slightly less margin, but they're gonna be significantly stickier than on the burglar fire alarm monitoring side. They're a lot more profitable. They have way higher gross profit margin, but they're gonna be a lot less sticky.

It's a lot more commoditized in the market. 

John Wilson: So what's the gross margin profile of each of these? Like, you know, the recurring, the reoccurring, the project. Like what does margin look like? 

Stephen Olmon: Yeah, so if you blend the RMR, um, you, you're probably looking at like 65% gross profit margins on RMR, and that's across both cloud and monitoring.

Uh, again, it kind of depends on what services Yeah, exactly. Yeah, it, it depends on the skew. On the service side, we like to be closer to 60% gross profit margins. We like to get a, you know, a little bit higher on the, uh, labor rate, a little bit more markup on the, uh, material. And then on, uh, a project you really, the gold standard really in the industry, the gold standard is, is [00:23:00] anything north to 40.

Uh, we really try to push north of 50, uh, and try to deliver on value and less on price. 

John Wilson: Alright, so you guys, you bought the business in 20. Three. Yeah. Two. Two 

Colin Tremble : early. Yeah. Early 23. Early 23, okay. 

John Wilson: Yeah. Early 23. Alright. How, how big was the team? The team was 

Stephen Olmon: the, yeah, that was like basically the hu the husband wife that ran it.

Two people in the office and then, you know, seven or eight techs. Six. Six or seven techs that were out in the field. Hey guys, just give us one 

John Wilson: second. All wrapped up. 

Stephen Olmon: All right. Thanks. 

John Wilson: That was, uh, not joking. My security and alarm guy

Stephen Olmon: don't cut it. Don't cut it. Yeah. Yeah, 

John Wilson: yeah. No, he, um, I'm not actually sure what he was doing, but he, but he just walked in and he like something 

Colin Tremble : very important. 

John Wilson: Totally, totally. I'm sure I'm paying a monthly fee for Yeah. He just sent you an 

Stephen Olmon: invoice. Yeah. Yeah. 

John Wilson: Okay. So there was 13 people on the team. 

Stephen Olmon: Yeah, there was 13 [00:24:00] people on the team.

It was pretty thin. And actually, uh, so the first day we bought it, uh, we called a, we called an all hands meeting to just, you know, announce to the employees, Hey, you know, we're the new 

John Wilson: owners. We own this. Yeah, yeah. 

Stephen Olmon: This is the first time in company history that they had all been together in a single place at a single time.

'cause the prior owner didn't believe in meetings at all. He was before his time. Oh yeah. You know, he was before Jeff Bezos or whatever, whoever's against the meetings. It's amazing. Before his time, so he was not into meetings. Uh, and so we got together and it was a wild ride too, because. Quite literally, we do the meeting, the techs go out into the field.

We're in the office just like trying to get to know people, get wrap our head around what's going on, and we get a call two hours later, three hours later I think. Yep. Mm-hmm. And our guys are, two of our guys are at a, a big mall doing a fire alarm inspection. They walk outside and their vans had been broken into, and $4,000 worth of tools had been stolen out of their vans.

It was like the [00:25:00] greatest welcome to acquisitions you've ever had in your entire life. And the owner just looked at us and just like, sorry man. Like this is the way it is. 

John Wilson: So it's, it's yours now. Best of luck. Yeah, exactly. 

Stephen Olmon: Yeah. Text me if you need 

John Wilson: something. 

Stephen Olmon: Yeah. So we got to experience buying all new tools for our guys and new back windshields for all their vans.

And um, so the team was super small and uh, we really, you know, we went in it with. I think, and I think this is honestly just like Steven and I just kind of had the right perspective from going in it, from having folks and friends that had bought businesses in the past. You know, my goal to come in, 'cause I was gonna step in to be the operational leader, was in the first really 180 days, but mostly 90 days.

I want to be the best employee at the business. I didn't really wanna change a lot. I didn't wanna like implement anything. My focus was how do I learn and just do everything that everyone else is doing? I'm gonna do [00:26:00] receivables, collections, scheduling, you know, all the work order management stuff, go out into the field, do some selling project management.

My goal was how do I be the best employee? And that really informed a lot about. Where do we, what levers do we need to up pull in terms of personnel, uh, to double down on? Or do we, we have too many people that could be outsourced, whatever. And so that's really what I focus on, is like, and I would tell any person that's purchasing a business for the first time, it's like, man, nothing we really did in the first six months is something we're doing today.

Like everything that we, we did today, we've done in the second year because. We spent, we knew what we were doing and kind of understood the problems at that time. 

John Wilson: How early were you guys, uh, like bringing on core or senior leaders to the team? Was that a first thing? Was that first six months? Uh, like how, how did you think about operations managers or really any leaders?

Stephen Olmon: Yeah. The first thing we did is promote one of our senior technicians who'd been around for eight [00:27:00] years, and we promoted him to be ops manager. Uh, and at the time he had basically everything in ops that was service, that was project management, that was senior technical issues. So he'd have to go troubleshoot stuff.

Um, and that worked for a long time or a long time. It worked for a year, year and a half. But what happened is we quickly started to grow to the point where that individual had way too much on their plate. Things were slipping because there's just too much. That's really what. It kind of precipitated us hiring an operations leader in the business to help us really focus on project management, um, kind of quality control on some of the service stuff.

Um, then we promoted within, uh, to hire a customer success manager to help oversee all of our cases, all of our billing related stuff. Uh, and then we just recently, uh, hired after hiring five salespeople, we just hired a, a sales manager to help us start managing sales. So that's really the leadership team is.

Is right now are those three guys and myself. 

John Wilson: And, and how big is the team today? 

Stephen Olmon: So we are just [00:28:00] under 40 people today. Is 

John Wilson: that the normal economics? Uh, like what, what is that? 150,000 of revenue per employee. Is that like usual for the industry or high or low, or like, what's good? 

Stephen Olmon: Yeah, so that's, that is we are unusual and here's why.

We chose as a strategy to leverage international team members throughout our organization very heavily. So of the 37 employees, I would say 11 of those is international talent, and these are folks that are helping with billing, scheduling, estimating. One of the things that we've done that I, we heard from the very beginning, and this was something that I have always been skeptical of.

And I think this may be my greatest win, is prior to getting in the industry, we would have owners tell us a businesses, Hey man, the number one thing that's tough is you got these sales guys and they win jobs and they spend all this time quoting and they don't have any time to go prospect. So they have very cyclical waves.

So my [00:29:00] goal was, hey, how do I outsource the quoting? How do I, how do I systematize the quoting? So we found literally our best and smartest international team member. His name's Felix, and we trained him on how to do all of our quoting. And this guy knows how to quote and design systems better than I do now.

He is so smart and asks so many questions. So now our sales guys are unlocked and now he's training additional people. Yeah, so now our field guys, they're just out in the field selling. That's all they do. They, they don't do anything else except for sell. They don't really need to touch quotes. So that was something that we spent a lot of time on that.

Everyone told us, man, you'll never, you're gonna have to hire a body for that if you're gonna try to take it off the salesperson's plate in your office. Mm-hmm. It's like, no man, we can, we can do it on our international team. 

John Wilson: You know, I have a friend in Florida, uh, Peter, and he's doing this, he has a big construction arm for plumbing and he has an international estimator and yeah, I think.

There's a, I don't know what country, I mean maybe [00:30:00] you can tell me what country, but I mean, architects and engineers have been outsourcing stuff for like two generations to, uh, like India or something. Is, is India where yours is or? 

Stephen Olmon: No, we have had a tremendous amount of success in Latin America. Um, so Okay.

We're in Houston, we're in Texas. And so, um, yeah, I would say our clientele is pretty sensitive to accent. Um, and so we have found that it's, a lot of times these estimators have to get on the phone with the customer to clarify some things about a design that's not over email. So they have to have strong written and verbal communication ability to be able to do that.

And so. We are experimenting with using some folks in the Philippines to do some more of the like true data crunching, building out in the spreadsheet stuff. Uh, but really the guy that leads at Felix, he's in Nicaragua and he's great, and like customers love him. They love talking to him and he knows his stuff, so it makes it even easier.

John Wilson: How early on did you guys start attacking [00:31:00] like organic marketing and like, what does organic marketing look like in, in this industry? I just don't even know. 

Colin Tremble : We really started, we mentioned this earlier. Number one strategy was and still is cross sell. 

Stephen Olmon: Mm-hmm. 

Colin Tremble : We, we have started to, you know, whether it's from an SEO perspective, local SEO strategies, um, you know, we're, we're also, uh, have some paid efforts too.

So there's things that, we're doing a variety of marketing channels. We've tested direct mail, you know, things like that to, I would say a smaller degree of success. But, um, the thing that. Has continued to drive growth. Even this week is cross sell, cross sell, cross sell. And um, it's, it's been kind of fascinating to see how much meat was on the bone.

It was a core part of our thesis. And so we can do all of the marketing things and it's driving [00:32:00] leads, that's great, but nothing holds a candle. To what we've done from a cross-selling strategy, 

John Wilson: cross-selling works, but what happens once you fully maximize that opportunity? Do, do you think You're not close to that because it, the way I guess I see cross-selling is like we're cross-selling an existing funnel of customers that are either like, they're paying us recurring, they're, we have service work.

Maybe inactive, like they're in our files, but we need to go do something. But you have to add new file, like new customers into the funnel to continue converting. So 

Stephen Olmon: yeah, let me give you some numbers to help you think through this. So right now I've got a target list and just like the core part of, because I just went through this with my sales team, I wanted to find commercial customers that had a corporate headquarters.

'cause a lot of times we get multiple locations. So I just wanted to see corporate headquarters. In the, just the Houston area. Okay. Not the greater Houston, so not spring, not all the areas that are kind of the metros around Houston. And I wanted to find those that are commercial in those, in that smaller density, we found [00:33:00] 1400 accounts.

And of those 1400 accounts, only 1% had more than one scope of work owned by us. So that means that my guys can go to 99% of those commercial clients and sell four other scopes of work. Then we can capture, they don't have enough time. And even if my guys did, we, we do a strategy called the coffee drop strategy.

And the coffee drop strategy sometimes looks like the taco drop strategy, which is basically, we have an international SDR and their whole job is to call our existing customers to say, Hey, Paxton's gonna be in the area. He'd love to stop by and bring you some tacos and or a coffee to introduce himself.

Customers are like, great. Yeah. Alarm masters. You've been my monitoring company for 12 years. Haven't seen you in 12 years. Paxon goes in and, and two out of 10 times we've tracked the numbers. The customer says, Hey, while you're here, will you look at these cameras? We need a whole new camera system, or we need a new access control system.

Or, [00:34:00] Hey, can you look at our fire alarm, our fire alarm vendor? We don't really like them. Can you take that over? That's the whole strategy. And so if I have them doing 10 of those a week, 15 of those a week, and then deal cycles, right? So then we're getting discovery meetings, we've got demos, investment presentations, uh, they've got plenty of accounts.

And then we're buying accounts in those general markets. Correct. So, you know, we bought alarm Masters and then did four other acquisitions after that. And those acquisitions have fed more accounts than we can keep up with from a, a cross-selling effort. 

Colin Tremble : If, if we bought a business with 80 accounts. And obviously the economics might be different, different types of customers, but we bought a business with thousands of accounts and have added thousands of accounts in two and a half years.

And we keep growing organically. So you're right, we keep adding, you know, to that funnel organically and inorganically and it would take us a couple years with our current sales team to touch every existing customer if we don't add, [00:35:00] and, and that's with like an aggressive. You know, coffee drops per day, per week sort of thing.

So there's a significant amount of opportunity and it just compounds on itself as we, you know, keep acquiring and keep adding to our sales team. And just rolling out that playbook, which I give Colin, you know, all the credit for. 

Stephen Olmon: And John, you're, you're, you would be surprised, this is part of our core thesis.

There were two core thesis we had in this industry as a go to market strategy for organic. The first one is. Nobody else is marketing to their existing customers. They don't, I mean, if, if the customer calls them or maybe they have a newsletter that goes out, but no one has salespeople calling on them.

Mm-hmm. Every owner we have met with. Explain to them what we are doing from a strategy. Even some of the most successful guys that we know that are large regional players have said, man, yeah, we don't do that. We should be doing that. I dunno why we don't do that. We need to do that. I'm, I'm gonna steal that.

Yeah, I'm gonna steal that. And, and, and that was one of our core thesis is [00:36:00] there is no cross-selling that's happening from an outbound perspective to your existing base. So that was core thesis number one. Core thesis number two has to do with service, uh, most companies. Do not want to. And this is part of our outbound strategy.

So this is, this is kinda wild 'cause you, from the industry you're in, you want people that have never done business with you to call you to do service. Uh, then this industry, that's not the case. So if, if you are monitored by a DT and your keypad is beeping and you call a DT, they're gonna say, Hey man, it's two weeks or whatever, and you need it now.

You call three other alarm companies in your area unless you're willing to switch it over to them for monitoring, they likely are either not gonna come out or they're gonna charge you a whole bunch of money that's two x market price because they're trying to price you out 'cause they don't want to come out to your site.

We take the exact opposite approach, so when customers call us, we say, see you tomorrow. And we charge them the same rate as our [00:37:00] monitored customers and 75% of the time. The customer comes back for additional revenue or flips to monitoring for us, or has a project that they want us to capture. So we emphasize service.

We wanna run AdWords on that. We wanna run marketing, play on that. We wanna help answer customers' questions so that we can then capture them in the funnel to then make them across, sell customer through coffee drops or taco drops or whatever. 

John Wilson: I think when, when Steven first told me about this three years ago, uh, my.

I, I think I remember my first like feedback and it was about the B2B side. Um, 'cause I, I just like, I struggle with, I struggle with like B2B just because it's my industry and I've got, like, I've gotten into like a group, just like a brain groove of like, this is how it works. Fortunately, I've been able to like, grow as, as a human and I, I get the benefit.

And this sounds kinda like a fun one and I think I under, I think I can understand how green [00:38:00] fielding here. It could be achieved with like that coffee drop in a new market two hours away, it almost feels like easier to Greenfield. 'cause you can build up a book of recurring business and then drop a, an office a year later.

That's it. You could build, it's kind of like an interesting market entrance. Whereas for me, like we need every single lead is every single project. And that that does make greenfielding a little bit more complicated. Or just like risky, whereas like you guys could build a path and just, you know, run that path.

Stephen Olmon: Yeah, you could. And, and, and also like, there's other tangential benefits that I think are almost equally as important in our industry. There's a lot of attention on retention, so like retaining your clients and that's a big, when you're looking to exit or do a valuation, they're gonna look at your retention.

Um, when our account managers are doing coffee drops for the eight out of 10. That are not getting some type of pipeline, [00:39:00] um, yeah, we are either finding a problem, a service call, or I've been frustrated because you guys have been, you know, whatever, sending my invoice to the wrong email and nobody seems to be able to fix it.

And all of that funnels in to my customer success department to solve the problem, to prevent them from atri six to nine months down the road. So it, it's sort of a double-edged sword. It also allows us to clean up their database. So we say, okay, let's look at all your contacts on your account so then I can find all the contacts.

Hey, the owner, you would probably want him called if your fire alarm is going off, right? Yeah, I definitely would. Okay. Can I get his personal cell phone and email please So I can make sure that if a fire we're calling him and then we put that in and now he's in the funnel and, and they usually have a home and they have another business that they own or other real estate or whatever.

Okay. I like this. 

Colin Tremble : It's basically. Um, maximizing the, uh, human dynamic. Like we have a really good friend in the industry that almost tries to avoid [00:40:00] sending people out. And so we have like these funny conversations back and forth about, you know, uh, whose strategies better? And I just kind of bet on human interaction.

And so if we get people in front of someone. We're gonna find a way to extract value from that encounter, whether it's a sale or it's better data, or it's a cross sell, uh, billing. You know, or, or like Colin said, getting out in front of a churn and so ingratiating ourselves and earning their trust back.

All of that stuff's valuable and it costs $5 and, you know, a two mile drive. 

John Wilson: I'm trying to imagine how well apparently our stops by. Somewhat often. Um, I, I wonder if he's distract. He's, he's just doing a coffee 

Stephen Olmon: drop, you know what I mean? He's just comes with a coffee drop. I 

John Wilson: wonder if he, I wonder what he got out of it.

I'll ask him. Please do. Um, how are you guys handling competition from these, the eight 80 ADTs or these like giant players? [00:41:00] 

Stephen Olmon: Yeah. There's a joke in the industry with, uh, independent operators that the best salespeople that these independent operators have. Is a DT. Um, because a lot of these, um, what's really unique, and I'll, I'll tell you this is a, is a challenge in this industry.

Customer satisfaction is extremely challenging in this industry because solving a problem isn't binary. If you have a clogged drain and you send somebody out mm-hmm. Is the drain unclogged or is the drain not unclogged? That's sort of binary, and I realize not all of the services in plumbing and HVAC and electrical are that way, but generally it's.

We're coming out, we're gonna do this thing. And it's done. Yeah. 

John Wilson: It's on off. We're, 

Stephen Olmon: yeah. Yeah. And we're dealing with a spectrum of satisfaction because this is technology, right? So, so think about every software you've ever purchased and you've been sold. When you get that software rolled out, it's some degree of what you were promised or [00:42:00] or what you felt like you were promised on the front end.

So if I say, Hey, I'm gonna come out and install five cameras for you, and I'm gonna have the tightest scope of work you could ever have on those five cameras. So I come out and I install these five cameras and I say, I'm just gonna replace your existing cameras. I'm not gonna touch your existing cabling 'cause it, it appears to be fine and you don't wanna spend the money on it.

Then we find out at the end of the job that one of the cameras has a bad cable. Well, the customer's perception is you need to fix that. And our perception is, Hey, we're reusing the existing equipment. So there's a high degree of communication that has to happen in the beginning, throughout and at the end of the cycle to ensure you help the customer understand and you're setting the expectation, Hey, this is what we are going to do and achieve anything outside of this sphere.

Is not gonna be part of our scope of work, and we deal with that every day. I'll give you just another, just quick example. [00:43:00] Customers call us and and say, Hey, I'm not paying my bill because my alarm system isn't communicating to the monitoring center anymore. Well, the only reason that would happen is because if you have an internet phone line, you didn't wire, you changed your internet provider, and your internet provider is no longer communicating to the monitoring center.

We don't know that. The only people that know that is the end user. And so they would call us and say, well, you should have known that my panel was broken. You should have known that. And so that's a tough thing. And honestly, from a, in, uh, from a user perspective, I could kind of understand a little bit of like how they could get to that place.

So you have to do a lot of education from a customer satisfaction perspective to help define this binary, what is complete. 'cause you don't wanna have this outstanding punch list or this outstanding expectation that's just not. Reality. 

John Wilson: What were the, what were the biggest you, you enter the industry, you guys are new to alarms.

I mean, it's sexy, but it's the first business you looked at and you bought [00:44:00] it. Like what were the biggest shocks of this industry that you just didn't know, like you wish you knew it before you bought it?

Colin Tremble : Uh, humans are hard. Humans are hard. I think, I think, I think home homeowners are emotional, especially. Um, so, you know, we, we still do have hundreds and hundreds of residential clients, so like mm-hmm. That's a real part of our business. Um, doesn't mean that we don't love them, but I understand like your home, your family.

So that's something that we probably underappreciated. What would you say, Colin? 

Stephen Olmon: Yeah, I would say, um, the severity of the consequences for like fire alarm in particular. So if you don't have your technology and your quality technicians doing the things they need to do to install the fire alarm system, or that fire alarm system gets into a troubled condition or state, um, real [00:45:00] lives are at stake.

And like, this is actually like a very real fear of mine and something that I think about all the time, which is what happens if there's a fire alarm and somehow it's not communicating and there's a fire and nobody knows. And so that is something as a business owner that I, I lose sleep over because, um, fire alarms are real and they provide protection, not just inside, but also they let people know outside.

And so for me, I didn't really appreciate that. I just thought, yeah, I mean, it's not our fault. I mean, it's a fire run out of the building and it's, it's not that simple. We're doing schools and daycares and churches and buildings of all different degrees of quality. Um, and, and so the answer for me is, yeah, I did not quite realize the emotional burden it would take to just like.

I realize that we can do our best and still something can go wrong and that's outside of our control. Um, and just kind of carrying that a little bit was, was something unique that I wasn't anticipating. Also add 

Colin Tremble : the, um, the degree at which some of the more aggressive [00:46:00] acquirers are willing to go down market.

Um, so we're seeing very aggressive activity in our industry from an m and a perspective. 

Stephen Olmon: Yeah. 

Colin Tremble : More than we appreciated. So. Uh, we decided that we looked fondly upon the industry and wanted to participate also. A lot of other people, FYI feel the same way. Yeah, that's funny. And, and I think even within that, specific to fire, fire accounts for many reasons are some of the most valuable accounts, whether it is LTV cross sell 'cause there's an inspection and kind of, uh, regulatory element to it all.

It is just very competitive and we've learned that the hard way. And we also really underappreciated just the significant amount of activity and players, um, that are coming right into our backyard and coming after deals. And [00:47:00] so, um, I like competing. It's fun, like played sports in high school, like that's fun.

It's competitive. You know, you are competing and, and we've also crafted our own narrative. We're not typically going to be, you know, the, uh, highest payer, um, or it's not what we, you know, go meet with the seller. It's not what we communicate. Yeah. And we share our story in who we are. But yeah, that's, that's something that we also did not fully appreciate.

John Wilson: What, what does, like, is it sort of like pest? 'cause I, I think any of these highly reoccurring. Uh, which I think sounds like this is a highly reoccurring, you know, there's monitoring and all that. These guys will go down market for pests or pools, like, it's kind of crazy. Uh, like $200,000 revenue and like, they'll get like attention.

So it doesn't look like that, like a million dollars and like we're seeing some real activity. 

Colin Tremble : Yeah. I mean, recently someone, uh, in the DFW [00:48:00] market got, you know, eight times on 600 K of SD. So, wow. I mean there's, there's some really aggressive buyers now. It's a very specific book of business. Mm-hmm. Uh, with some specific talent and types of accounts, but there are aggressive buyers for the things that they want and where they want them.

And so yeah, lots of interesting industry for industry like dynamics at play right now. 

John Wilson: Something I think that this is just like a total aside. Something I think is kind of funny. Um, I was reading this tweet yesterday and he was talking about like size of EBITDA and, and maybe it was multiples or, but he said like how 500,000 EBITDA is so small, which from like the m and a's perspective, like it is, it's, it's, yeah.

Sort of inarguable, right. Um, and like, and, and same with a million. Like, you know, you'll talk to these, you'll talk to these guys and they're like, God, I don't even know if I can like go down market like below two and a half million ebitda. That's crazy. And, and I'm, [00:49:00] and it's just funny 'cause I'm like, it took Wilson 60.

Seven years to break 3 million of ebitda. Like it took us 65 to break one. And, uh, I, I just think it's kind of, I, I think it's a funny, like 500,000 of earnings is so small and like from an acquirers it is, there's a ton of risk. And like all of that is totally true. And the other thing that's equally true is like there are so few businesses that ever hit 500,000 of earnings.

Yeah. Yeah. It's kind of crazy. Yeah. Uh. Yeah. It, it, it, it's just a funny, like, separation of realities. Yeah. Well, I appreciate you guys, uh, coming on today. So you're about to, uh, launch a podcast called Entry and Exit, and it's about this industry sharing the journey, uh, sharing lessons learned, talking about acquiring.

Um, I'd love to hear a little bit about like what, what you're hoping to [00:50:00] do here with, with your show. 

Stephen Olmon: Yeah, we're really excited. I, I think one thing that's unique about Steven and I is we have a different perspective than a lot of owners in this industry. Um, a lot of guys have been in this industry for 35 years, and, and they know product and they know install really well.

Uh, what we get questions on all the time is, how do you grow, how do you do m and a? How do you grow organically and inorganically? What are people looking for? Whenever I'm want to exit my business, what are the metrics and the things subjective or objective that people wanna look at when they buy my business?

And that's what we wanna talk about. We want to talk about how to grow, how to get into the market, and then also what does it look like when you wanna exit that market. Uh, we're, we're not the smartest guys when it comes to products and fire panels and all the things that are technology related. And we're gonna be the first to say that, and hopefully we can bring some folks on that will educate us on some of that.

But we're, we're gonna be really focused on is what we're great at, which is growth and strategy and 

Colin Tremble : acquisition. Yeah, that's right. I think we want to give an honest look. [00:51:00] Into the security and alarm space and share our journey, share what we're learning, um, talk to, to other really bright people we've benefited significantly from other people sharing with us.

And so it's just a, a mechanism to kind pay that forward. 

John Wilson: Yeah. 

Colin Tremble : Awesome. 

John Wilson: Yeah, this would be a lot of fun, uh, to the listener. Make sure you're subscribing on YouTube. Uh, you guys have a newsletter coming out. Follow the socials and we'll provide those, uh, links below. And I know that our next episode with Entering Exit is gonna be the $10 million blueprint, and it's gonna be digging into systems delegation, hiring, and how to scale past that owner operator mode.

So that sounds like a ton of fun. Um, that's right. Yeah, that's gonna be sweet. We're excited to 

Stephen Olmon: dig into it. Lots to talk about. Awesome. 

John Wilson: Well, thanks guys for coming on. If people want to get ahold of you, where can they find you? 

Stephen Olmon: Yeah, you can find me on Instagram. I'm c at ctx. You can find me on LinkedIn under Colin Trimble.

And then of [00:52:00] course, yeah, on YouTube or any of our stuff that's gonna be on social. I'm Steven Ulman everywhere. Amazing. 

John Wilson: If you like what you heard, make sure you check out owned and operated.com and hit that like and subscribe.